New cooperation format targets Sweet Harvest!
Bai-Tushum Bank and Kaindy-Kant OJSC have signed agreement to expand access to financial resources for small and medium businesses, engaged in agriculture. In particular a new project is targeting farmers, who grow sugar beet in Chui province. This is a real illustration of value added chain development, when all the actors of agricultural process find themselves in equal conditions, and the very first actor- the farmer – receives fair payment for the supplied beet harvest.
Due to insufficient collateral Kyrgyz farmers face a lot of difficulties, including limited access to distribution markets, no chain in place for cooperation with vendors and hindered access to financial resources. In order to support farmers the Bank has launched a new credit product titled “Sweet harvest”. Now beet farmers will be able to borrow necessary loan amount in 1 day under preferential terms with simplified collateral requirements. The factory guarantees timely payment for the beet supplied by the farmers, which makes it possible for the Bank to minimize risks, related to loan repayment. Such condition would enable the Bank to significantly reduce interest rate for the new credit product.
“The agreement signed today is another evidence that the Bank is aiming at supporting clients’ business development, granting the opportunity to farmer entrepreneur not only to access financing using guarantee mechanisms with favorable lending conditions, but also increase sugar beet output volumes supplied by farmers to the factory due to the introduction of farmers financing innovating scheme– value added chain financing. On the one hand, the integration into value added chain gains significance for the majority of Kyrgyz farmers, as they start specializing in growing certain crops and become more experienced. At the same time, a farmer is guaranteed to receive a fair price. On the other hand within the confines of the established new Eurasian Economic Union, Kyrgyz farmer entrepreneurs will be able to exercise their chance to join large market environment through such mechanisms, gain experience in supplying high quality products”, – points out Gulnara Shamshieva, General Manager of Bai-Tushum Bank CJSC.
“The annual increase in the number of beet suppliers signifies the trust that the farmers have in us and their readiness for the future mutually beneficial cooperation. We are glad to see this. Let us note that for the past few years the factory has been selling high yielding sugar beet seeds produced by leading European companies, providing farmers with consultancy services, training materials on agricultural cycle rules and standards of sugar beet production. Now, thanks to the partnership, sugar beet farmers will get access to financing for their business”, – says Alexandr Shaliuta, the General Director of Kaindy-Kant OJSC.
It is noteworthy that the partnership was made possible by the cooperation with Business and Finance Consulting GmbH and KfW, which assisted in the development of the credit product under Kyrgyz Rural Finance Programme, implemented by Kreditanstalt für Wiederaufbau (KfW), a German state-owned bank.
About the factory:
Currently Kaindy-Kant OJSC is the only operating white sugar manufacturer in Kyrgyzstan. Factory processing capacity constitutes 3,000 tons of sugar beet per day. Kaindy-Kant OJSC collects sugar beet at eight beet collection points located in Chui oblast. In 2014 the enterprise’s output constituted 20.0 thousand tons of beet sugar.
About Business and Finance Consulting (BFC) GmbH:
BFC international company was established in 2003. The head office of the Company is located in Zurich, Switzerland. BFC activities are mainly focused on providing a broad range of qualified consultancy services for financial sector actors. The solutions offered by the Company enable to increase work efficiency, introduce innovative systems and technology and develop new distribution markets. Over the time of its existence, BFC has successfully implemented more than 100 projects in 55 countries worldwide.